Many tracker funds charge too much and fail to replicate the index they are supposed to track c...
Many tracker funds charge too much and fail to replicate the index they are supposed to track claims Chartwell Direct. Furthermore the independent financial consultant pointed out that the majority of FTSE All Share trackers have underperformed over the past five years.
The criticism is levied in Chartwell's tracker fund guide which lists both the performance and charges of a host of tracker funds. The group even questions 'why investors would invest in a tracker, which performs below the market index when, on a good day, an active fund will outperform it'.
In defence of trackers, Chartwell concedes that several US and Japan trackers, over certain periods, performed better than their respective indices and could offer a better alternative to an active managed fund.
The Deutsche UK Equity Index was highlighted for its poor -19.5% difference from the FTSE All Share over 5 years while Fidelity's Moneybuilder UK Index showed the best differential from the All Share at 3.97%.
Tracker funds that actually earned the guide's recommendation are the Prudential UK Index Tracker Trust for the FTSE 100, the HSBC FTSE 250 Index, the Hargreaves Lansdown FTSE All Share Index, the M & G European Index Tracker, the Deutsche US Equity Index, the HSBC Japan Index, the Legal & General Pacific Index, the Close Fund Management FTSE techMARK and for socially responsible trackers, the Close Fund Management FTSE4GOOD.
‘Most significant’ upgrade since launch
Changes happening over coming months
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Aimed at HNW clients and family groups
Set for 1 April 2019